In two charts

Isn't that correlation a little misleading?  Stock market capitalization includes only public companies.  I wonder if the ratio of public to private hasn't widened since 1980.

That correlation was too abstract for me, my man.  Still can't fathom how stock market capitalization as a percentage of GDP correlates to a concentration of wealth, but I'm a simple fellow.  

I think the Minsky moment has already occurred.  But I'll bite.  What is your policy to increase demand?

Incubus:  "Explain to me, where the Dow was @ 14,000 five years ago in large part from artificial "wealth" (credit, leverage, derivatives) - what has so improved as to warrant a higher stock market now?"

It's definitely Fed action driving down interest rates combined with an expectation of inflation.  Stocks are up because bond yields are so bad and because of future expectation of a weaker dollar.  But we may not get that weaker dollar.  What we may get instead are weaker earnings and a lower multiple, driving stock prices lower again.

My policy:  I'm for lower corporate rates and higher personal rates (1950s era) on excessively high incomes.  That makes it harder for wealth to leave companies, where it can be most productive.  Entitlement spending (X unemployment insurance) should be "pay as you go" and not capitalized onto the national balance sheet.  We should only pay out of SS and Medicare what we have taken in.  That alone would end the debt issue for the United States.  Finally, state work programs should be established for those on unemployment insurance.  After three months on benefits, one would be required to show up for work 4 hours per day or lose those benefits.  

At the moment, the economy we still have is unsustainable.

MP, correct, not sustainable, neither side debates that.

I like your work-for-bennies idea, would be a huge benefit to muni's.

You're in the right ballpark on income taxes at the top, we need to discourage stagnation, encourage that money to go to job creation or innovation.

I would debate the 1950's rates though, a 90% tax is a bit too much, I'd be happy with the Clinton ate, maybe a return to the Reagan 50% bracket.

On corporate taxes, where it's known the bulk of jobs come from small businesses, we should be exploring a progressive system or one that rewards employment, a focus of some kind on a VAT might be a good idea if cost of goods are a concern - incentivize cap-ex, tax excessive margins on large corporate incomes.

The loopholes & tax havens gotta go, any corporate tax break should serve a productive purpose, "job creating" tax cats should be in direct proportion to jobs created,

Reagan was spot on about Cap gains, it should be taxed at the same progressive rate as income.


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Steve, the "entitlements" vs "wealthy tax" debate goes full circle to a failure of the concept of "trickle down" since the Reagan era.

Lowered taxes has served to encourage some degree of job creation, but the massive surge in consumer debt since 1980, paired with flat wages means we will see years, maybe decades of rangebound markets & faltering economy if we don't change that.

Taxes intended to spur job creation should be in direct exchange for jobs created, not the theory that they "should" create jobs.

I don't oppose sane reforms, not at all, but to cut anything right now would be a direct cut to GDP, it's just that simple.

As it no stands, the government spends 60% of all healthcare costs, take just 5% off and that comes directly out of the food bill, rent, clothes and other essentials.

In turn, that loss in consumption equates to economic slowdown.

We should be focused on healthcare costs instead of cuts to life and death services, the industry is replete with lavish 7 & 8 figure salaries, 60% of it comes from taxpayer money.

I call that "entitlement" spending.

The problem with all these solutions is that they do not deal with reality. The reality is "It is what it is" and you can't change that right now. It will take time, a business friendly environment, resources need to be focused on getting people to work and it doesn't matter right now how much you can earn. I don't know why the libs don't understand this other than they want to exploit it. 

inc, everything you espouse is entirely based on history, essentially what you expect to happen based on history. Because it is history, the powers of the world and especially the US, know how to resist it. 

The ways of the liberal have become very extreme only because what they have done to our society in the past have only created a marginal return. Like I have said often, November will tell the tale and January will be the hammer. 

It all can be fixed with a few strokes of the pen and probably will get fixed over time (as the markets enforce it).  The ME-dicare generation will never allow it willingly.

One of the big problems with looking to history for philosophy and methodology on how to fix the problems of today is that 30 years ago the world was an extremely different place. China had nearly no industrial production and the middle class didn't exist. America still had a large section of manufacturing and pay it's workers high wages (relative to the skill/education set) because it could charge what it wanted due to a lack of any real competition. American philosophies worked at the time because western civilization (the only real major economies at the time, not counting Japan and a few other smaller players) for the most part had certain ground rules that everyone in the world played by. These included things like comparable minimum wages and benefits. Another fact was that shipping costs as well as warehouse business marketing was in it's infancy. This helped to make brick and mortar as well as intracountry commerce cheaper.

In this day and age, it's cheaper to ship something made by a worker in another part of the world, where slave pay is still legal, than to have it made just down the road from where you live. Unfortunately it'll be cheaper to have it made there until we either except MUCH lower wages OR force the other places in the world to raise their pay rates. Unfortunately it's highly improbable that places like China and India will have their pay rates increased anytime soon much less have minimum wage laws created.

You can't play by the gentleman's philosophy if the other players are willing to play cheap and even cheat. In 1980, the developed world all played by nearly the same rules because it all carried most of the same philosophical and business principles. Now in 2012, the developed world has is very splintered and nobody carries the same principles except one, make as much money as possible. In some countries there are no rules on how you can do that and it means the countries with rules on how you compete will have their businesses moved to places where there are no rules.

So going back to some tax rate that worked back in 1990, 1980, 1970, or 19-whatever, won't work because in America we play by more strict rules than the countries we compete with. For better or for worse, we can't win and compete unless we change how we play the game against our competitors.

treeHamster said: s that 30 years ago the world was an extremely different place. China had nearly no industrial production and the middle class didn't exist. America still had a large section of manufacturing and pay it's workers high wages (relative to the skill/education set) because it could charge what it wanted due to a lack of any real competition. 

 To buttress Shap's comment, thirty years ago competition with Japan was wreaking large changes on the American economy.  Technological innovation in Japan (investing in new smelting technologies) completely eradicated the American steel manufacturing base that was then located in Pittsburgh.  There is no steel manufacturing in Pittsburgh today due to this era, which the U.S. characterized as Japan "dumping" steel into our market.  Also, Japan's wages at the beginning of the 1980s remained far below ours, which Congress consistently made an issue much like they do with China today.

Furthermore, wages in China are rising and will continue to rise versus the U.S., just as they did in Japan in the 1980s and 1990s. 

Today's crisis has nothing to do with American competitiveness.  The U.S. is still one of the easiest places to do business (is consistently ranked that way).  It is the largest and most dynamic and diverse economy in the world.  

Our crisis has one cause:  an unrealistic expectation of rising living standards that led to two grand economic mistakes.  1.  A middle class that voted itself larger and larger pension and health benefits that society cannot pay for.  2.  The tendency of that same middle class (fueled by the banks) to accept higher and higher levels of personal debt to fund said unrealistic living standard expectation.

Number 2 has been largely fixed.  Number 1 still remains to be.

http://online.wsj.com/article/SB10000872396390444246904577571042249868040.html?mod=WSJ_hps_LEFTTopStories

Inc, this article may support your argument, but it also shows how muddled the situation is.  Do we think tax policy can reverse the concentration of wealth?  If so, how?

To me the bit about 1/3 of the federal budget being funded by new borrowing is more troubling.  Means about 9% of the economy is funded by the deficit.  Could be in most Americans' best interests to change that.  

The notion that anyone will take from the rich and give to the poor is a complete pipe dream, the rich are the cream that has risen to the top, they are smarter and stronger than the average people and will win every time, they are in control and will stay in control, increase my taxes and I will just continue to pass them on to my employees, my clients and the average consumer, change the rules and I will figure out how to get around them. yes life is good!!!!